I am fascinated by the massive growth in mobile phone penetration globally. This must be one of the biggest social changes that humans were ever submitted to. I am sure that this social phenomena, will eventually impact the way that we trade and pay as well. This is what I am writing about. See disclaimer at the bottom of blog.

Wednesday, November 17, 2010

iPhone, Google and NFC

It would be irresponsible for a mobile banking blog not to have an opinion on iPhone, Google and NFC. It is impossible to ignore the amount of excitement in the formal and social media about the instance when Eric Schmidt tapped his Nexus S on a proximity reader recently (Read here). With this small action, Schmidt signalled an intend from Google than just cannot be ignored.

I did write about the rumours related to Apple's venture into the the NFC space some weeks ago (Read here). I did highlight some of the challenges related to solving a few process and liability problems related to the secure element and personalisation then, so will not dwell on it again. Suffice to just re-emphasise that this whole mobile payment thing is much more complex and difficult to do than other digital stuff - far more difficult.

It is far more interesting to speculate on the strategic intend and approach of Apple and Google with this drive. (I enjoyed a post on technology and financial services with reference to this question a lot. (Read here)). The fundamental question is how these two giants intend integrating into the existing payment eco-system, how they intend changing it and what is in it for them. The complexity of payments is that it is tightly integrated and dependant on many other players. (Just think of the importance of banks (deposit-taking and settlement), regulators (compliance and risk-mitigation), card associations (inter-operability) and retailers (acquiring of payments), to name but a few. It is inconceivable to deploy a payment system without considering the role of these players (and many others).

Many questions remain unanswered: Do Google and Apple intend integrating into this eco-system? Working with the banks or card associations? Who will be their biggest friends and who should be scared of them? By delivering phones with NFC chips in them, what do they think will be the impact of it? Will this enable more people to transact and in when? Where will they make money? and who will loose revenue, because Apple and Google will steal it?

No matter how I dissect these questions, I only get to one conclusion: It is all about iTunes and Google accounts. The plan is that the phones will ultimately become an extension of the on-line experience. This is why Jim Balsillie (CEO of RIM) comment is so interesting: "We'd be fools not to have NFC in the near term ". (Read here).

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This is my personal blog. It is not my intention to distribute news that is available elsewhere, but rather comment on it or provide the reader with my own thoughts. Unless otherwise stated, the views expressed on this blog are mine alone. I expressly disclaim any and all liability of any kind or nature with respect to any act or omission based wholly or in part in reliance on anything contained on this blog. Any links that appear on this blog are purely for your information. I'm not making any representations as to their content or, in fact, any other matter concerning them. Follow all links at your own risk.